San Diego Home Values Inflated By Inaccurate appraisals

Bob Schwartz, a Certified Residential Specialist with www.brokerforyou.com in San Diego California says many San Diego home buyers are paying for appraisals on home purchases that are over inflated. These inaccurate appraisals are costing buyers thousands in potential savings on their home purchases.

Bob explains his findings as follows:
Working mostly as a listing broker, Bob always receives calls from appraisers who want to confirm the reported MLS sales price, ask about the condition of the property and if the seller gave any buyer concessions. By concessions, we are referring to payment of buyers closing/loan costs or adding some improvement to the property prior to the close of escrow. By checking with the listing brokers, the appraisers were doing their due diligence to insure that their appraisals reflect the true resale value.

Bob says that about two years ago, the frequency of these appraisal calls decreased below normal. He has received only one such call for his last six sales.

Many San Diego real estate brokers agree that in the current San Diego real estate market, it is very rare for a buyer not to get concessions from the seller. We are not talking small change here; this is real life recent San Diego sales data that Bob Schwartz provided:

La Mesa $362,000 sale - $4,500 credit to buyers

San Carlos $480,000 sale - $14,400 credit to buyers

Mission Valley $360,000 sale - $10,000 credit to buyer

San Carlos $385,000 sale - $10,000 credit to buyers

Are the average San Diego home buyers now paying approx. $375 for a residential appraisal really getting an accurate reflection of their potential new property’s value? If an appraiser looks at the San Carlos $480,000 sale above, as a comparable without inquiring about the concessions ($14,400 in this example) the appraisal will be too high. If the appraiser does inquire about the concessions, they have to consider the comparable property was worth not $480,000 but $465,600!

Without payment of the concession, it is unlikely this property would have sold. If the true facts did cause the new appraisal to come in below the contracted purchase price, the buyers would not be obligated to go forward with the sale. In the current strong San Diego buyers market, the buyers would be in a very strong position to have the seller reduce the sales price to the accurate appraised value and thereby potentially save thousands!

Bob believes the easy correction to this problem would be a State requirement that appraisers of residential properties use due diligence to verify the full details of all comparable sales used in an appraisal. Until this happens, Bob advises buyers to tell their mortgage lenders that they want a copy of the appraisal and will be looking for some notation on the document showing that the appraiser made inquiry into both the condition and possible concessions on each comparable used.

Bob Schwartz is a Certified Residential Specialist, real estate broker with over 27 years experience in residential real estate sales with www.brokerforyou.com in San Diego California. His popular San Diego real estate blog is: http://www.brokerforyou.com/brokerforyou

Bob also runs a search engine optimization site at: http://www.websitetrafficbuilders.com